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One solution to rule
them all?
State Street’s Charles River deal appears to have struck a chord with asset managers who
have been discussing its front-to-back offering, but is one solution a viable option?
S
tate Street’s $2.6 billion deal for
front-office technology provider
Charles River Development appears
to have sparked interest within the asset
management community.
Despite questions being raised about
the valuation of Charles River at the time
the agreement was announced, State
Street’s goal of improving its front-to-
back offering was raised in multiple panel
discussions at the InvestOps conference
in London.
Mike Tumilty, director of global opera-
tions at Aberdeen Standard Investments,
suggested data management could be out-
sourced and pointed towards State Street
as a potential solution given its scope of
services.
“If you look at that proposition: custody,
fund admin, middle-office, they have a
FX-type data solution and they just added
Charles River,” said Tumilty. “When you
add those component parts together, I’m
sure there are other third-party service
providers who are looking at them and
saying, ‘How many parts of the value
chain could we poach here from a single
supplier?’
“From a strategic perspective, it’s quite
appealing from my point of view, looking
at the P&L of our organisation to think
about being able to buy front-to-back,
back-to-front fully configured applica-
tions with all of the data having been
cleansed, scrubbed, validated, taking all
my data feeds in from the Bloomberg,
Thomson Reuters, Fitch and S&Ps of this
world.”
State Street announced the deal for
Charles River in July, claiming the
acquisition would significantly boost its
20
Global Custodian
Fall 2018
front-office capabilities for asset manag-
ers through CRD’s automated provisions.
Custodian dominance
Charles River serves more than 300
clients across institutional, wealth, asset
owner and alternative market segments,
including 49 of the top 100 asset man-
agers that in aggregate have more than
$25 trillion in assets under management.
“From a strategic perspective,
it’s quite appealing.”
MIKE TUMILTY, DIRECTOR OF
GLOBAL OPERATIONS, ABERDEEN
STANDARD INVESTMENTS
The firm recorded revenues of more than
$300 million in 2017.
On the topic of one provider offering a
range of solutions, Jim Kearney, global
head of investment operations, Vanguard,
questioned whether it was a concern for
other service providers and technology
vendors given State Street’s recent move.
“I see some innovation from custodians
and what they are doing with their data,”
said Kearney. “With State Street buying
Charles River Development, do you worry
about innovation coming from that side
of the market and that full front-to-back
[offering] being one solution that fixes it
all?” he asked the panel.
In response, Broadridge’s, Mark Weller,
managing director of EMEA asset man-
agement, said that some people don’t
want to be tied up with an individual
platform and that a front-to-back solution
isn’t the only way to go.
“If you look at the custodians and fund
administrators, again, I think they are the
best example of a convergence between
ops and tech,” said Weller. “Tech is
replacing the ops side of it. Clearly, CRD,
Eze, these kind of acquisitions are about
getting the full lifecycle.
“In some cases, there is a lot to say for
that, but in other cases people don’t want
to be tied to an individual platform. Some
of those platforms are good at one asset
class but not good at another.
“It’s about providing a platform for most
of their requirements, but giving them the
access to plug and play a bit. If one desk
doesn’t like that solution or it doesn’t fit
their asset class then they can switch it
out and use something else.”
“I see some innovation from
custodians and what they are
doing with their data.”
JIM KEARNEY, GLOBAL HEAD OF
INVESTMENT OPERATIONS, VANGUARD
Stifling innovation
The front-office at hedge funds and asset
managers has evolved in such a way that
having the right data to execute and man-
age trades has become essential.
Getting the most out of your data, be
it from the investment book of records
(IBOR) or the accounting book of records
(ABOR), means a lot of overlapping of
activities, blurring the lines between the
front-, middle- and back-office.
Data from each of these is needed by
the other simultaneously, whether it is